Global Food Prices Rise to 18-Month High, Experts Warn of Continued Increases
Global food prices recently rose to an 18-month high, with some food baskets expected to continue climbing, according to market watchers.
October FAO Food Price Index Sees Highest Level Since April 2023
In October, world food commodity prices were at their highest since April 2023, according to the most recent data compiled by the United Nations’ Food and Agriculture Organization.
FAO Food Price Index: Categories with Significant Price Spikes
The FAO Food Price Index, which monitors the prices of five food baskets: grains, meat, dairy, vegetable oils and sugar, rose by 2% in October, driven primarily by a surge in vegetable oil prices.
From January to October, the vegetable oils category had the largest price spike, jumping 24% on the back of higher prices for palm, soy, sunflower, and rapeseed oils. That was followed by FAO’s dairy category, which rose 17% from the start of the year, led by cheese and butter prices. The gauge’s meat category increased 10% since the start of the year.
Conversely, the cereals category, which largely comprises wheat and rice, dipped 4.5%, while sugar declined almost 5% year on year. Supply-side factors, ranging from weather to transportation challenges, have been the main drivers, analysts concurred.
Key Food Items Expected to See Further Price Increases
Palm Oil and Other Vegetable Oils
Vegetable oil prices are expected to rise significantly next year, with palm oil in the spotlight as higher global demand meets supply constraints, said Cheang Kang Wei, a physical agriculture broker at financial services firm StoneX.
Beef
Beef prices have surged as a result of the drought in the U.S. southern plains, which have “severely reduced” the cattle herd, said Stephen Nicholson, a strategist at agribusiness bank Rabobank.
Coffee and Cocoa
The sugar, coffee and cocoa markets face greater price uncertainty than other commodities, said BMI commodities analyst Matthew Biggin.
Fruits and Vegetables
A category that would be “greatly impacted” by policies proposed by U.S. President-elect Trump would be fruit and vegetables, said Bradley Rickard, a professor of food and agricultural economics in the Charles H. Dyson School of Applied Economics and Management.
Conclusion
The ongoing surge in global food prices is expected to continue, with several key food items facing significant price increases. Market watchers are warning of further price hikes in vegetable oils, beef, coffee, and cocoa, as well as fruits and vegetables.
FAQs
Q: What is the main driver of the increase in global food prices?
A: Supply-side factors, ranging from weather to transportation challenges, have been the main drivers.
Q: Which food baskets are expected to see further price increases?
A: Palm oil and other vegetable oils, beef, coffee and cocoa, and fruits and vegetables are expected to see significant price increases.
Q: What is the significance of the FAO Food Price Index?
A: The FAO Food Price Index monitors the prices of five food baskets: grains, meat, dairy, vegetable oils and sugar, and provides insights into the trends and patterns of global food prices.
